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Key to success: Fargo site plays important role in Digi-Key growth

Pamela Perish retrieves items for a customer's order at the Digi-Key facility. Nick Wagner / The Forum

Fargo - A year ago this month, a handful of em ployees started fulfilling orders for Digi-Key, a Thief River Falls, Minn.-based electronic parts supplier from Fargo. Now, Digi-Key is on track to have more than 100 employees here by the end of the summer.

About 1,500 to 2,000 orders are shipped out of Fargo daily, around 10 to 15 percent of all Digi-Key’s orders.

Fargo now has 50,000 SKUs – stock-keeping units – on site. It’s a small fraction of the 1 million SKUs on hand in Thief River Falls – and 3 million searchable parts on its website – but they’re among the company’s most popular, said Cody Huschle, director of Fargo operations.

The company also has moved nearly half of its receiving operations to the north Fargo satellite. It finished a 40,000-square-foot addition in April to connect two buildings and will acquire an additional 100,000 square feet by November, which will bring its total space to 340,000 square feet.

It’s been whirlwind growth for the distribution center, said Huschle, and more automation and more product stock are in the works.

“It’s going to be a big part of Digi-Key’s future,” Huschle said of the Fargo site.

The company hasn’t been overly vocal about its Fargo expansion, admits Dave Doherty, Digi-Key’s executive vice president of operations.

The addition of the Fargo distribution site – the first time an order was fulfilled outside Thief River Fall in the company’s 40-plus-year history – was a departure for Digi-Key, which employs 2,950 people in Thief River Falls.

Thief River’s total population is about 8,700.

Doherty said there’s some anxiety for locals when they hear about the rapid growth in Fargo, describing it as natural but unwarranted concern.

“This is all about good, healthy expansion and growth,” Doherty said. “This isn’t about giving up one for the other.”

The decision to grow the Fargo satellite is largely labor-related. Product distribution employees in Thief River Falls were on mandatory overtime for more than two years, Doherty said.

That was eliminated about six months ago, thanks to some process change and “relief” out of Fargo, he said, though voluntary overtime is still available.

“I don’t think anyone would dispute the crunch we have,” he said.

While the Fargo metro area’s unemployment rate is low – 2.5 percent in May – Doherty said the labor pool is “extra tight” in northwest Minnesota, where several companies, including Arctic Cat, Central Boiler and Mattracks, compete for workers. Digi-Key offers three commuter buses, from Grand Forks, and Crookston and Bagley, Minn. Fargo simply has a larger labor pool, Doherty said.

“It’s a well-educated population. It has many of the same excellent customer service and work ethic we find up here,” he said.

Digi-Key workers receive large shipments of electrical components – items like semiconductors, sensors, switches, batteries and lighting components. Those packages are broken down into smaller batches, which are stored on large shelves until they’re moved to the “picking” area. Employees pick parts from there to fulfill orders, which can be for any number. They’re then packaged and shipped. Digi-Key advertises that all orders placed by 8 p.m. are shipped the same day.

“We’ve been continuing to grow at a great clip, and Fargo has become part of that strategy,” Doherty said. “It was a more aggressive plan than we originally thought.”

Sherri Richards has worked for The Forum since 2002. She is the features and business editor, overseeing Variety, SheSays, Farmers' Forum, the daily Business pages and Saturday Business section. Have a comment to share about a story? Letters to the editor should include author’s name, address and phone number. Generally, letters should be no longer than 250 words. All letters are subject to editing. Send to letters@forumcomm.com